Welcome backing for Britain's rejection of EU finance regulation

Conservative MEPs today welcomed legal opinion handed to the European Court of Justice which deems that a key clause in a piece of EU finance regulation is illegal and should be annulled.

Syed Kamall, Tory spokesman on economic and monetary affairs in the European Parliament, said the legislation aimed at controlling so-called short-selling was potentially damaging to Britain and had been too rushed and too sweeping to work fairly.

The London MEP was speaking after the European Court of Justice received opinion from its top legal adviser the Advocate General, recommending acceptance of an appeal by the British Government which requests that Article 28 of the Regulation be overturned.

The Court in Luxembourg, which rules on the application and legality of EU legislation, ultimately follows the Advocate General's opinion in the vast majority of cases.

London launched its appeal against Article 28 after unsuccessfully opposing it during the legislative process last year. It argues that the clause illegitimately imposed sweeping regulation in an area that national governments should best decide for themselves.

The opinion says there is no proper legal basis for the problem clause - which hands the European Securities and Markets Authority (ESMA) powers to intervene in the financial markets of EU member states in the event of a threat to the "orderly functioning and integrity of financial markets".

Tellingly, it declares that rather than create harmonisation within the single market, the effect of the clause is "the replacement of national decision-making with EU level decision-making".

Dr Kamall said: "This is potentially a major humiliation for the Commission and the EU as a whole, and a notable victory for David Cameron's government. The Commission must learn not to make up regulation as it goes along, without a clear legal basis.

"Following the revelation on Tuesday that EU lawyers have also rejected the legitimacy of the proposed Financial Transaction Tax, this is the second major legal setback in a couple of days for the Commission and Parliament.

"They should realise that key legislation like this, which impacts upon important parts of the financial services sector, are far better dealt with at national level rather than in Brussels."